Ordinary insurance companies were not willing to extend insurance services to older citizens since it was considered a losing proposition. With the enactment of Medicare, 99% of older people in the country have health insurance and poverty among this group has dropped significantly. With this program, people now have access to better healthcare services which has resulted in increased life expectancy. The reason we can say with some degree of certainty that Medicare has met its goals is grounded in the fact that it has provided elderly with greater access and more choices of healthcare facilities. Medicare gives them the opportunity to choose the best physician, good inpatient services and also pays their bills right on time to avoid problems with hospital and medical care authorities. "Medicare provides health benefits to 41.7 million elderly and disabled Americans. Most (88%) have their health bills paid by the traditional fee-for-service program, while 11% are covered by managed care plans, primarily HMOs." (Medicare advantage)

Along with this, Medicare has also managed to keep its costs significantly lower than those of private insurance companies. Medicare spends 2% of its budget on administration of the program while most insurance companies spend anywhere between 8 to 15%. By the end of 1998, Medicare witness less than 1% increase in costs per person while it went up 6 to 10% for private insurance companies.

Compared to Medicaid which is viewed as a comprehension program for low income groups, Medicare has certainly outperformed Medicaid in many ways. In 1998, when 88% of older people were covered by Medicare, 73% of low income groups did not have proper insurance. This means that an overwhelming majority of people (around 44 million) were left uninsured. Even employer-based insurance programs have not been able to perform well. Most workers are poorly covered under these programs and premiums have gone up from 12 to 22%.

Even though Medicare is a successful program, it comes with its flaws. These flaws require additional insurance. As we mentioned above that while Medicare provides good coverage,...

It is for this reason that some people opt for additional insurance plans to expand their healthcare coverage. "
Because of gaps in Medicare's coverage, the elderly spent an estimated 22% of their income, on average, for health care services and premiums in 2002 (Maxwell, et al., 2002). To help with Medicare's gaps, most have some form of supplemental insurance. In 2001, of non-institutionalized beneficiaries:

34% had employer-sponsored benefits (28% as retirees). The share of large employers offering retiree health benefits dropped from 66% in 1998 to 38% in 2003 (KFF/HRET, 2003).

23% owned a Medigap policy, but only 7% of all beneficiaries had drug coverage from Medigap." (Medicare at a glance)

Medicare has a very challenging time ahead. Healthcare costs are increasing dramatically and consistently which means that this program will need to have a heavier budget or some other means of providing adequate coverage to senior citizens. Medical costs are increasing due to steady increase in drug prices. Life expectancy has increased which also means that coverage is now provided to greater number of people-some of whom are very old indeed. These really old citizens require more care than someone say 15 years younger and for this reason Medicare costs are expected to rise significantly. The cost of treatment has also gone up because of new technological innovations. Technology has made healthcare services more expensive causing additional burden on Medicare program.